Jefferies raises Paragon price target
Jefferies raised its price target on Paragon Group of Companies to 540p from 440p and kept its rating at ‘buy’.
Financial Services
14,164.95
17:14 18/04/24
FTSE 250
19,450.67
17:14 18/04/24
FTSE 350
4,334.00
17:14 18/04/24
FTSE All-Share
4,290.02
16:54 18/04/24
Paragon Banking Group
685.50p
16:45 18/04/24
“Our basic thesis is that Paragon is returning to a more normal level of buy-to-let (BTL) mortgage market share, having been constrained by lending capacity,” said Jefferies.
It said the group has developed a number of levers of growth and funding diversity, which can help to offset concerns about the visibility of loan purchases.
It also noted that Paragon is under-levered in relation to its buy-to-let peer group and would benefit from increasing leverage so long as it avoids funding working capital requirements from short-term bank credit facilities.
Downside risks to the stock include an unexpected and significant rise in interest rates that would put a strain on landlords and could increase loss provisions sharply, and a big fall in house prices that would impact confidence in the sector and new business volumes.
At 1335 BST, Paragon shares were up 2.1% at 423p.